The New York Times has an article today describing the downbeat assessment of some analysts about the newest Pixar film Up. Technically, it's accurate: some idiots think an animated film about a 78 year old man who ties thousands of balloons to his home and goes on an adventure isn't very commercial. What kind of tie-ins can you do about an old man and some balloons? Where's the theme park ride?
But a fairer, smarter article would have made clear how foolish those fears about Pixar truly are. In fact, Pixar is the safest bet in Hollywood both commercially and critically -- no studio, no director, no star has ever had the unbroken string of success that Pixar has enjoyed with every single film it's made from Toy Story in 1995 to 2008's Oscar-winning WALL-E.
Here are some nits I've picked in the article:
1. "Richard Greenfield of Pali Research downgraded Disney shares to sell last month, citing a poor outlook for "Up" as a reason." -- First, any analyst who downgrades a massive international conglomerate like Disney because of one movie is short-sighted and dumb, the sort of narrow-minded, quarter-to-quarter analyst who never takes the long view. It's true that the stock of film studios will sometimes fluctuate when a new movie opens bigger or falls flatter than expected. But long-term, telling people to sell a company's stock because of one film (especially when it's a major corporation that obviously won't live or die on one film) is just wrong.
2. Plus, Greenfield is flying in the face of the facts: Pixar has released seven films in a row that have grossed $450 million (and often much more) at the box office alone worldwide. I will bet him $1000.00 today that Up grosses at least $400 million total box office worldwide and it'll be the safest money I've ever made. That does not include DVD sales and rentals, pay per view, cable and TV sales and so on.
3. Another quote from the NYT article: "People seem to be concerned about this one," said Chris Marangi, who follows Disney at Gabelli & Company. Doug Creutz of Cowen and Company said qualms ran deeper than whether "Up" will be a hit -- he thinks it will -- but rather whether Pixar can deliver the kind of megahit it once did. "The worries keep coming despite Pixar's track record, because each film it delivers seems to be less commercial than the last," Mr. Creutz said.
One big plus for Up that they ignore -- reader travy brought this up in the comments below -- is that this film is Pixar's first 3-D movie and 3-D has been a huge draw in and of itself. That alone makes this film more commercial, just as releasing a film in color or sound when those were novelties made films more appealing to audiences in the '20s and '30s.
Besides, what numbers are they looking at? It is patently untrue that each Pixar film "seems" to be less commercial than the last. While the Pixar movies have been remarkably consistent -- again, $450 million worldwide box office for their last seven movies -- some have been bigger than others. But ALL of them have been commercial. The lowest grossing movie of the last seven is Cars, which also happens to be the HIGHEST grossing in terms of toy sales, well over $5 billion and counting, as the NYT article itself pointed out.
Right before WALL-E (which had no dialogue for the first half hour and grossed $530 million worldwide) was Ratatouille, another film analysts moaned was wildly uncommercial -- a movie about a rat who wants to be a chef? Indeed, it "only" grossed $206 million (the lowest of the last seven) in the US. But overseas? It doubled that figure and worldwide box office hit $624 million. Of their nine movies, Ratatouille is their third-highest grossing of all. That's just one movie before WALL-E. So how is that a sign of decreasing commercial success? In fact, looking at worldwide box office, Pixar has three of the Top 50 biggest hits of all time, Finding Nemo (Pixar movie #5), The Incredibles (Pixar movie #6) and Ratatouille (Pixar movie #8). Of course, Ratatouille grossed $11 million less than The Incredibles -- $624 million compared to $635 million, so I suppose that's an example of decline. Again, the NYT quoted the analyst accurately but when he says something that is demonstrably untrue, shouldn't you challenge him on it or wonder why you're quoting him as an expert in the first place?
4. Another NYT comment: "Pixar's last two films, "Wall-E" and "Ratatouille," have been the studio's two worst performers, delivering sales of $224 million and $216 million respectively, according to Box Office Mojo, a tracking service."
This is simply untrue. First it is foolish to look only at US grosses instead of worldwide grosses, especially for movies with major overseas potential like action flicks and animated films. As I've already shown, worldwide, Ratatouille is Pixar's third biggest hit of their nine films (and one of the 50 biggest hits of all time), while WALL-E is their fourth biggest hit. But even looking at US figures alone, their statement is untrue. Pixar's first two movies grossed less than $200 million. Toy Story grossed $191 million and A Bug's Life grossed $162 million, so those are Pixar's "lowest" grossing movies -- both, of course, are also substantial hits. Of the last seven movies, yes, Ratatouille and WALL-E are the lowest grossing Pixar releases in the US. But even that is misleadingly narrow. Except for Finding Nemo -- the 16th biggest worldwide hit of all time, mind you, and a movie that grossed a massive $339 million in the US -- every single Pixar movie has grossed between $206 million and $261 million, a remarkably consistent figure. Yes, you can rank them, but isn't it more accurate to point out how consistent they've been? $245 million. $255 million. $261 million. $244 million. $206 million. $223 million. How is that a sign of decline?
You could talk about the high price tags -- $175 million for making the film (and not counting marketing) seems to be the Pixar norm now and that's quite high. However, even a simple romantic comedy seems to cost at least $80 million these days and the Pixar films deliver. They've all been profitable, often extremely profitable film by film. Add it up and you've got a production cost of nearly $900 million and profits easily ten times that when you include merchandising.
5. Another NYT issue: "Retailers, meanwhile, see slim merchandising possibilities for "Up." Indeed, the film seems likely to generate less licensing revenue than "Ratatouille," until now the weakest Pixar entry in this area." Yes, that's quite true. And of course Disney is masterful at leveraging a box office hit into theme park rides, plush dolls and on and on. But just because a film is animated doesn't mean it can or should be expected to be a toy bonanza. If Pixar released 9 live action films in a row with the box office grosses of their animated ones, analysts would be shouting to the high heavens about what an amazing success story they were. Where were the toy tie-ins to the Disney hit National Treasure, starring Nicolas Cage? Where were the theme park rides? It didn't have any but no one expected them because it was a live action film. Animated films are not a twice a year event any more. They come out virtually every month, one on top of the other. Expecting them ALL to churn out merchandising opportunities is short-sighted and stupid. If a movie grosses $450 million at the box office, that's a success, toys or no toys.
6. And finally, from the NYT: "Perhaps Wall Street would not care so much if Pixar seemed to care a little more. The co-director of "Up," Pete Docter -- who also directed "Monsters Inc." -- said in a recent question and answer session with reporters that the film's commercial prospects never crossed his mind. "We make these films for ourselves," he said. "We're kind of selfish that way.""
That's the crux of the matter. Pixar makes films, not would-be blockbusters. It also by and large resists sequels and isn't obsessed with merchandising opportunities. But Wall Street sees a "cartoon" and gets angry if there's no video game or plush doll in the works. If they arise, great. If not, who cares? You don't make lasting (or commercially successful) movies by putting the toys before the story. That Pixar "formula" -- tell great stories and worry about everything else later -- has proven remarkably successful both with critics and at the box office. Their movies are stunningly consistent at the US box office and are virtually guaranteed money-makers. You think Wall Street would love this.
Cars dealt with NASCAR and so seemed to have limited overseas appeal. But in fact it did fine overseas -- grossing $461 million worldwide -- and of course has been a toy bonanza. Ratatouille was absurdly uncommercial, even nauseating according to some, and yet became one of the 50 biggest hits of all time. WALL-E was a Chaplin-esque silent film for about half its running time (and has a lead character who almost never says a word) but grossed more than $500 million.
We've been here before. When Ratatouille opened to a lower first weekend gross than Pixar's last four films -- $47 mil rather than $60 to $70 million -- it was immediately declared a flop and the end of the Pixar magic. Of course, it went on to become Pixar's third biggest hit and one of the 50 biggest hits worldwide of all time.
So Up isn't commercial? True, you're not supposed to make movies starring old people. And animated films are supposed to have lots of pop cultural references, celebrity voices and sight gags every minute or so. That's not how Pixar works. Their refusal to churn out sequels (or the horrid straight-to-DVD spin-offs that have cheapened so many Disney properties) infuriates Wall Street. Their ability to make artistic films on seemingly oddball topics and make tons of money doing it confounds Wall Street. But anyone who characterizes Pixar as becoming less and less commercial or anything other than wildly successful on every level is lying or stupid and probably both.
Pixar is in the midst of the greatest string of creatively satisfying, massive commercial hits that Hollywood has ever seen. No studio, no director, no star has ever gone 9 for 9 at the box office the way Pixar has and certainly not with the reviews to die for as well. Up looks tantalizingly ready to continue that streak. Surely some day Pixar will stumble and have an out and out flop. But it hasn't happened yet.
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